A federal district court in Minnesota has ruled in a case that individual officers and employees of an entity may be charged with violations of the Bank Secrecy Act (BSA) and found personally liable for civil damages under that act.
The defendant was the CCO of MoneyGram International from 2003 until 2008, and during that period was responsible for BSA compliance and the creation and operation of an effective anti-money laundering (AML) program
The case is worrying for any employee of a financial institution subject to the BSA and especially anyone responsible for compliance with the AML program within a covered institution.
The defendant argued that section 5318(h) did not apply, as the admonition to establish an ALM program only applies to the institution and not to individuals. The government argued, and Judge Doty agreed, that the general civil penalty section of the BSA 5321(a)(1) applies, which does include individuals, stating that civil penalties can be imposed against a “domestic financial institution or nonfinancial trade or business, and a partner, director, officer, or employee.”
Treasury’s Financial Crimes Enforcement Network (FinCEN) was seeking to enforce a $1 million civil penalty. The imposition of civil penalties under this statute is breathtaking, permitting a $25,000 per day penalty for noncompliance with the ALM provision and an $25,000 per violation penalty for failing to file suspicious activity reports (SARs) with FinCEN. FinCEN noted that the penalty imposed was “substantially less” than what apparently was possible for the number oviolations they encountered.
Moneygram admitted it violated the BSA and willfully failed to implement an effective ALM program. MoneyGram forfeited $100 million and entered into a deferred prosecution agreement (DPA).
The defendant also sought injunctive relief from the lifetime prohibition from working in the banking industry imposed in the enforcement action against him. The judge refused to lift the injunction on the grounds that there was a question of fact regarding whether the injunction was punishment for past wrongs (penal) or was equitable and designed to protect the public from future harm.
Source: gpo.gov, “U.S. Dep’t of Treasury v. Haider,” No. 15-cv-01518, Judge Doty, January 8, 2016